Hold On to Your Hats – CPI in 3 Hours

Hold onto your hats since we have the Consumer Price Index (CPI) being released in just 3 hours.

Expectations are for a reading of 7% on the headline number (year over year) with core CPI at 5.4% year over year.

So the 10 year treasury closed at 1.75% yesterday after meeting resistance at 1.81% on Monday–if we see a CPI release that is lower than 6.7% on the down side or more than 7.3% we could see fireworks. On the low end the narrative will be “the Fed can delay interest rate hikes”. On the upside we could hear ‘talk’ of larger interest rate hikes (for instance between 37.5 and 50 basis points in March instead of 25 basis points) or an accelerated run off of the balance sheet.

Of course there is nothing an investor can reasonably do in preparation for the number release except buckle up and wait. As always we hope for interest rates increases to occur at a slow pace–what really happens we have no control over.

Right now equity futures are just a little ‘green’ with no real movement in interest rates–but no doubt these numbers will be more volatile in a few hours.

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